When Philip Leigh was in the seventh grade he read Rifles for Watie, a novel by Harold Keith that tells the story of a boy who worked on both sides of the war in Indian Territory (modern-day Oklahoma). The questions that story raised concerning intersectional trade during the conflict long reverberated with Leigh, and the result is his recent book Trading With the Enemy: The Covert Economy During the American Civil War (Westholme Publishing). Leigh explores how clandestine commerce between North and South persisted throughout the war, and the forces of greed, corruption, necessity and political acumen that drove it. What stood out in Rifles for Watie that made Leigh want to take on this topic? In Keith’s foreword to the novel, the author wrote that trading between the lines was actually a big business and provided a couple of sources.

What do you mean by big business?

In Gone With the Wind, the typical impression of blockade runner Rhett Butler is that he would go to Europe with cotton and come back into the South with luxury items. In fact, twice as much cotton reached the North during the war than went to Europe. Even though cotton production dropped drastically, about 90 percent, the price of cotton went up 10-fold, so the dollar volume didn’t change that much. It was big business.

How did Lincoln view this aspect of the cotton trade?

Prior to the Civil War, the international settlement standards [way to pay off debts between nations] were almost all based on the gold standard. If you had a trade deficit, you had to make it up with gold. If it hadn’t been for the cotton exports, the trade coming into the United States would have created a sizable trade deficit. If the U.S. balance of payments were chronically negative, the situation would weaken the international stature of the government and might lead to foreign intervention. So Lincoln wanted enough cotton to get out to bring in enough gold to keep the country looking strong Also, if the cotton famine had grown severe in Europe, it could have led England and France to intervene in the Civil War, because cotton textiles was the world’s biggest industry at that point, particularly in Great Britain and France.

What was being traded between the sides?

Anything that could aid the South and sustain the war was considered contraband: medicine, food and clothing, but also weapons and munitions. From the South, most of the trade was in cotton, tobacco or turpentine. The North would purchase cotton for gold, clothing, medicines—and all sorts of necessities that helped keep the Confederate armies in the field. An important one was salt, because there was no refrigeration. Salt was used as a preservative, so it was a valuable commodity.

How was the trade conducted?

The problem for Lincoln was that it was not a clear-cut decision. Part of the dilemma was that as the Union Army occupied Confederate territories, the only way residents in those occupied territories could survive economically and provide for themselves was to trade their commodities. Some of these citizens were also Union-loyal, and if he didn’t let them sell their cotton, then they couldn’t take care of themselves.

Who did the trading?

Lincoln set up a plan through the Treasury Department to let loyal citizens take responsibility for buying the cotton. So the department issued certificates to people authorized to purchase merchandise and commodities from Southerners. The problem was that, even though they were Union-loyal, their primary motive was to make money. Retreating Rebel armies would destroy the cotton unless they had some incentive not to, so the people who got the certificates would infiltrate beyond Union lines and buy the cotton for gold. If the Southerners could sell the cotton for gold, they wouldn’t burn it. Or if they could sell it for something they really needed—like salt or food or clothing—then they wouldn’t burn it.

You write about corruption at high levels in the Union.

One example is Senator William Sprague of Rhode Island—the son-in-law of Salmon Chase, secretary of the Treasury—who was the richest man in the United States at that time. He had inherited his wealth from his father, and established a fortune in New England in cotton mills. At the first part of the war he led a regiment of Rhode Islanders into Washington, D.C., when Lincoln had no soldiers to defend the place. But Sprague needed cotton to keep his mills running. He met a man named Harris Hoyt, who claimed to be a Union-loyal Texan, and Hoyt proposed to Sprague that if he would give him the money, he would take a shipload of arms and munitions and other contraband items to Texas, where he would sell them [for cotton], and he had the authorization from the Texas legislature to build a cotton textile mill in Texas. He would construct it, operate it and use the profits to buy raw cotton to ship up to New England to Sprague’s mills. They proceeded to do this. Hoyt went to Matamoros, across the Rio Grande from Texas. He sneaked his contraband cargo across the Rio Grande and took it up to Houston, where he sold it and started shipping cotton up to New England. The shipments began in December 1862. In November 1864, one of the ships carrying cotton was caught in the blockade, and it was discovered that the cargo was owned by one of Hoyt’s accomplices, who lived in Troy, N.Y.

Was Sprague caught?

Hoyt decided to confess everything. He implicated Senator Sprague. This was all presented to General John Dix, who was in New York City at the time, and he sent all the papers to Secretary of War Stanton. Before Stanton did anything with it, Lincoln had become a martyr. Stanton probably decided to drop the matter because any high-profile investigation into intersectional wartime trade would reflect unfavorably on the recently martyred president.

You also write about Ben Butler’s role in the trade.

When he went into New Orleans, Butler had a net worth of $150,000. Six years later, he was worth $3 million. There’s no way he could have done it without trading with the enemy. He was clever enough to use intermediaries. Butler came in May 1862, and he was near some of the richest cotton-growing country in the world. Secretary of State William Seward essentially told the British: “Now that we have New Orleans, you’ll be able to start buying cotton to address your shortage. ”

Butler was the largest owner of a Massachusetts textile mill. Through his brother Andrew he controlled most of the New Orleans trade. Finally Lincoln replaced Butler with Nathaniel Banks in New Orleans.

In November 1863, Butler went to Norfolk, Va., where he repeated the whole process. After Wilmington, N.C., fell, the South lost the major blockade-running port available to Robert E. Lee’s army. From January 1865 to the surrender of Lee’s army in April, most of the supplies that sustained Lee’s army in Petersburg came through Butler-controlled Norfolk, Va. And he and his cohorts collected a toll on everything.

How did the trade affect the war?

The Confederacy ran low on food, clothing and many supplies, but they generally had weapons and munitions. The Ordnance Department did a good job; it started making weapons. They got everything else through either the blockade or by trading with the North. If not for this intersectional trade, they probably wouldn’t have had the food or clothing to stay in the field.

Originally published in the October 2014 issue of Civil War Times. To subscribe, click here.

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